COMPOSITE SUPPLY VS WORKS CONTRACT

[NAMAN DOKANIA]

Sir,

A Private Limited Company entered into a contract with Railway to under take an activity amounting to Rs. (say) 20 Crores which content the following:

1. Supply of ballast (Stone)and spreading the same under the tracks /- Rs. 8 Crores

2. Transportation of Ballast from Factory to railway track point : Rs. 5 crores

3. Linking of railway tracks by tracks being provided by railways :- 7 crores

Will the service be a composite supply taxable @5% being ballast being a principal supply or a works contract service @18%.

Please state the reasoning as well. Any further info is most welcomed sire/madame.

P.s. Tax rate on ballast is 5%

[KASTURI SETHI]

No BENEFIT of composite supply is available in this context. Each service is to be taxed separately and specifically.

REASONING : Go through the extract of Board's Flyer No.4 dated 5.8.19

Relevant extract for your convenience

"A works contracts and restaurant services are classic examples of composite supplies, however the GST Act identifies both as supply of services and chargeable to specific rate of tax mentioned against each of such services (works contract or restaurant)."

This is relevant even now, especially, concessional rate has been withdrawn w.e.f. 18.7.22.

[Shilpi Jain]

1 & 2 could be a composite supply though terms of the contract would be relevant to decide.

3 could be a job work and liable @ 12%.

AI Summary

Dispute Over Tax Rate: Are Railway Project Services a Composite Supply at 5% or Separate Services at Higher Rates? A Private Limited Company contracted with the Railway for a project worth Rs. 20 Crores, involving the supply and spreading of ballast, transportation of ballast, and linking railway tracks. The query concerns whether this constitutes a composite supply taxable at 5% or a works contract service taxable at 18%. One response indicated that each service should be taxed separately, referencing a Board's Flyer that classifies works contracts as supply of services with specific tax rates. Another response suggested that the first two activities could be a composite supply, while the third might be job work taxable at 12%.